Showbiz Stocks Benefit From Soaring Dow

UPDATE: Infotainment companies breathed a sigh of relief today as their stocks rallied when market indexes finished Thursday way, way up (Dow +410, S&P +50, NASDAQ +100). Now let’s see if it’s sustainable and if CBS, Disney, Viacom, News Corp and others dependent on advertising revenue can start worrying less. Today’s jump was aided by the SEC rules on naked short-selling that went into effect today and a similar crackdown announced in London. Investors also gave a big thumbs-up to a prpoposal being floated by the federal government to create a Resolution Trust Corp-type entity to take all that toxic debt off financial balance sheets. If implemented, this would ease the current credit crisis and affect Big Media in a very positive way, especially pure-play movie studios. Film financing to help them minimize risk might be reborn. But I’m getting ahead of myself. Let’s take this one day at a time.

3 Comments

Crystal Diane Stevens • on Sep 18, 2008 12:15 pm

It won’t hold.

Anyone who knows Wall Street is aware that this kind of thing happens all the time. Just when everyone has declared they’re never going to invest again, the stockmarket oh so mysteriously goes up. But only for a short time. Just long enough for people to pour their money into it. Then, like clockwork, the ass falls out of everything all over again.

Expect some roller-coasting as people buy stocks at bargain basement prices, and then sell them to take their profits when they go up, causing them to go down again, then up again.

This will go on for a while, then things will stabilize once the hysteria dies down.

longridge • on Sep 18, 2008 12:15 pm

As much as you may think short sellers are bad for the markets – thank them today because they were the primary demand driver for the strong rip higher not mutual funds or retail investors. It was not due to naked shorting rule (which is already a rule for 99% of all short sellers in real companies) in any of the stocks you mention above. The public has been absent from demand in the past few years (based on mutual fund inflow data) as hedge funds have been the real players in the markets. The big move occured with the RTC type announcement. Throw in Cuomo and others trying to put a halt to short selling in financial stocks. Considering financial firms of all types are reducing leverage I highly doubt credit markets have improved (after one up day in stocks) which will make the hope for film financing low on most financial minded funds/firms priority list. My personal belief as media trader for a hedge fund is that the market has not seen a bottom and media stocks are crappy long term investments. Media companies are generally poorly run with overpaid workers including actors putting out too much money losing crap.